UNCOMMON CENTS #26

LOGICALLY, OUR FIRST SECRETARY OF THE TREASURY, ALEXANDER HAMILTON, FAMILIARIZED HIMSELF WITH MONETARY POLICIES. WE CAN TRUST HIS OBSERVATION THAT "THERE SHOULD BE A LINE OF SEPARATION BETWEEN HONEST MEN AND KNAVES," WHO HANDLE MONEY.

MY OBSERVATION OF HUMAN NATURE GARNERED FROM IMMERSION IN THE WORLD OF RETAILING AND CONSUMERISM, IS THAT "THERE WILL ALWAYS BE A LINE OF SEPARATION BETWEEN INVESTORS AND FOOLS.

TEMPTATIONS AND RATIONALIZATIONS TO ABANDON SELF-SUFFICIENCY AND SAVING ARE UBIQUITOUS. YOUTH SHOULD INVEST. SOCIAL SECURITY WITHDRAWALS FROM YOUR PAYCHECK REPRESENT ONLY A TOKEN 'SAVINGS' TO FALL BACK ON IN THE FUTURE. YOU SHOULD BEGIN WITH FORCED SAVINGS. ACCUMULATE A MINIMUM OF $3000 IN A SAVINGS ACCOUNT TO THEN INVEST IN A LOW-COST INDEX FUND FOR THE LONG TERM. THIS STRATEGY WILL PAY OFF AS THE BASIS FOR A SATISFYING RETIREMENT. PREFERABLE TO ONE LOW COST FUND WOULD BE THREE FUNDS, A U.S. STOCK FUND, AN INTERNATIONAL MARKET FUND AND A U.S. BOND MARKET FUND. THE DECISION REGARDING THE ALLOCATION MIX OF THESE THREE FUNDS, 33%, 33%, 33% OR 85%, 20%, 15% CAN WAIT. NO RUSH. AFTER YOUR INITIAL INVESTMENT, JUST REGULAR DEPOSITS OF A MERE $50 WILL 'KEEP THE BALL ROLLING.' THIS BALL WILL ROLL UPWARDS; BETTER YET, IT NEED NEVER BE CAUGHT. KEEP YOUR INVESTING SIMPLE, BUT KEEP INVESTING. INDEX FUNDS GENERALLY BOAST ROCK-BOTTOM EXPENSES BUT PERFORM WELL OVER BOTH THE SHORT RUN (5 YEARS) AND THE LONG TERM (30 YEARS).

OF COURSE, NO STRATEGY FOR RESPONSIBLE LIVING WILL SUCCEED IF A FOOL AND HIS MONEY PART FOREVER. DISCIPLINE IS IMPORTANT IN A RESPONSIBLE LIFESTYLE. FOR EXAMPLE, SELF-DENIAL FOR THE SAKE OF SAVING NATURAL RESOURCES AND MONEY CAN BE PRACTICED BY INDULGING IN FEWER SHOWERS.

HINT: LIVE BELOW YOUR MEANS - AND PATIENTLY INVEST. IT'S SMART. IT BUILDS SELF-ESTEEM. K.I.S.S.